We are excited to share more information about this year’s Symposium on Wednesday, February 8, 2023. One panel featured at the event will be “Busting the Myths: What is Keeping Women & People of Color out of the Wealth Management Industry.”
The panel will cover misconceptions about compensations, types of jobs, and community impact, which we’ll also cover in this article.
Myth no.1: Jobs in the financial industry are only commission-based.
There is a common misconception that all jobs related to wealth management or financial services are purely commission-based. This can be daunting for many people, particularly women, who may be more comfortable with a regular paycheck.
Of course, some jobs are commission-based, such as financial analysts. Other positions may base a portion of salary on the number of financial assets managed or fees from products sold. However, a large percentage of finance jobs pay a regular salary.
Over the last 10 years, the average hourly rate for someone in the financial industry has been on a steady incline, per the US Bureau of Labor Statistics. In September 2012, the average hourly rate was $29.43; in September 2022, it increased to $42.06.
According to Kiplinger, finance was a top college major in 2022 because of its entry-level salary and the room to grow.
The pay structure in wealth management depends on many factors, including the company, its clients, and required tasks. A career in the industry doesn’t mean you’ll have to live off commission. Sometimes a commission is just a nice bonus on top of an already healthy salary.
Myth no. 2: There’s a predetermined career path.
It’s common for people to think there’s only one possible career in wealth management as a financial planner or that there’s only one way to be successful in this industry. But the truth is, everyone needs financial guidance, and catering to them and running the teams to help takes on many different roles.
Another myth about wealth management is that you must have a financial background or be great at math. Depending on your role, math might not be a significant factor in your daily work. In reality, we need people from various backgrounds to help diverse clients as they plan for the future.
Working in the wealth management industry is not only about numbers, it’s more than just selling financial products. Our job is to help people solve problems and plan for the success of their financial lives.
There are different wealth management careers, including a general wealth manager or specialist focusing on a specific industry. As a specialist, you may help others with investment advising, financial planning, or estate tax and law.
If you choose the wealth management route, your role will likely depend on the needs of your clientele. Some clients may need a financial plan to reach specific goals, while others may require investment advice.
You may also choose a career in the industry that has a much different role, as financial jobs have lots of crossovers. For example, many financial professionals work in client support, technology, compliance, education, or marketing/public relations.
There are several different roles within the industry and an equal number of ways to start a career in finance. The common goal among all financial professionals is to help people reach their goals as they plan for the future.
Myth no. 3: Wealth management provides no social or community impact
As mentioned above, everyone could benefit from trusted financial advice. According to The 2020 TIAA Institute-GFLEC Personal Finance Index, US adults answered 52% of financial literacy questions correctly.The annual study showed that nearly half of Americans struggle to make sound financial decisions regarding investing, saving, spending, and debt.
Financial literacy helps you see how much money you make vs. how much you spend, understand and pay back debt, avoid a financial crisis (even in an emergency), and prepare for the years ahead. When we can all plan for the future we want, we generate more financial stability and are able to contribue in bigger ways to our communities .
Wealth managers can help their clients invest in community causes they care about, including low-income housing, childcare, community development, job creation, and retention, investing in small businesses, and establishing trusts.
Other impact investments may include those that benefit the environment — such as reducing waste and pollution and slowing climate change. Or investments that positively impact society, such as helping to provide clean water, building safe schools, or reducing poverty.
A wealth manager or an advisor can also help clients build generational wealth, which creates lasting change for families and the communities in which they live. Creating generational wealth involves protecting assets, comprehensive financial planning, and tax and estate planning.
The bottom line is that having a wealth management career allows you to contribute to the greater good. You can do it in many ways and with various clients and causes.
Myth no. 4: Only white men work in wealth management
It’s no secret that white men have dominated the financial industry over the last few decades. Slowly but surely, times are changing. The numbers over the last 10 years show a small increase in the race and gender gap within the industry. Currently:
- 74% of finance professionals are men, while 26% are women
- The most common ethnicity in the industry is White (76.3%), followed by Asian (8.7%), Hispanic or Latino (7.7%) and Black or African American (5.2%)
- 9% of all finance professionals identify as LGBT
Many companies and organizations — such as Diversitas — are working to ensure the financial services industry is inclusive. We want people with diverse backgrounds working in the industry to help bridge the gap between wealth management and underserved communities.
All of the myths listed here have contributed to the lack of diversity in the industry and to whom it serves. We need to continue to dispel the misconceptions, so the next generation of financial professionals can see the opportunities.
As we continue to strike down these untrue beliefs, know that there is a considerable need for diverse talent for well-paying, meaningful jobs in this industry. When we bring more diversity into the workforce, we all rise together.
To learn more about wealth management career myths, register to attend the Symposium. You can also watch last year’s Symposium, and other events, available in our Resource Library.